FINANCIAL STRATEGIES FOR MSMES IN TRANSITIONING TO A GREEN ECONOMY: INSIGHTS AND IMPLICATIONS
Keywords:
Green Economy, MSMEs, Financial Strategy, Circular Economy, Sustainable FinanceAbstract
The transition to a green economy presents a strategic imperative for Micro, Small, and Medium Enterprises (MSMEs), offering pathways for sustainable growth and resilience. However, this transition is fraught with significant financial barriers that hinder widespread adoption. This study investigates the financial strategies employed by MSMEs to facilitate their shift towards circular and sustainable business models. Utilizing a quantitative approach, data were collected via a structured questionnaire from 150 MSME owners and managers across the manufacturing and service sectors. The analysis employed descriptive statistics and multiple linear regression to pinpoint key determinants. Results reveal that access to green financing (β = 0.42, p < 0.01), the adoption of digital technologies for resource efficiency (β = 0.31, p < 0.05), and strategic stakeholder collaboration (β = 0.28, p < 0.05) are the most significant positive predictors of successful green economic transition. Conversely, high perceived investment costs and a lack of regulatory incentives pose substantial impediments. The discussion contextualizes these findings within the broader literature on circular economy and digital transformation, highlighting how MSMEs leverage financial innovation and technology to overcome traditional barriers. This study contributes to the extant literature by providing an integrated framework that connects financial strategy, technological capability, and multi-stakeholder engagement as a triad for green transition. Practical implications include recommendations for policymakers to design targeted financial instruments and for MSMEs to proactively integrate digital tools into their financial and operational planning for sustainability.
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